Amazon is increasing the price of its Prime membership for U.S. customers, in part to offset rising expenses related to inflation, transportation and wages, the company announced Thursday.

The monthly fee for Prime membership will go up from $12.99 to $14.99, and the annual membership from $119 to $139. 

The price change — Amazon’s first since 2018 — will go into effect on Feb. 18 for new members. For current Prime members, it will apply after March 25, on the date of their next renewal.

“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to omicron,” Amazon CEO Andy Jassy said. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”

Amazon saw more than $4 billion in costs from “inflationary pressures” and lost productivity in operations, said chief financial officer Brian Olsavsky. 

He has cited that number in the past as supply chain disruptions and labor shortages impacted Amazon’s operations throughout 2021. Olsavsky said previously that labor and inflation-related expenses added about $2 billion to Amazon’s operating budget, and predicted that number would double in the fourth quarter.


The company isn’t having trouble hiring, he said. Amazon has doubled its headcount worldwide, adding 273,000 employees in the last half of the year to bring its total to more than 1.6 million workers. 

But Amazon is having trouble keeping workers on the floor, Olsavsky said. Many have had to call in sick and others have filled in for colleagues, racking up overtime hours and overtime pay.

“We’ve shown that we can hire well, we just have to get everyone healthy and regain our productivity from all the investments we’ve made in people and capital over the last couple years,” he said. “We’re seeing those costs trickle into [the first quarter of 2022] as well.” 

Amazon’s net sales increased 22% in 2021, reaching $469.8 billion, compared with $386.1 billion in 2020. 

The company reported net income of $33.4 billion, or $64.81 per diluted share in 2021, a jump from $21.3 billion, or $41.83 per diluted share, in 2020. That’s a 56% increase.

In the last quarter of 2021 — the three months from October to December — net income increased 98% to $14.3 billion, or $27.75 per diluted share. In the fourth quarter of 2020, Amazon reported net income of $7.2 billion, or $14.09 per diluted share. The bump in income at the end of 2021 includes Amazon’s investment in Rivian Automotive, an electric vehicle manufacturer that went public in November. Rivian’s IPO generated nearly $12 billion for Amazon.


Amazon’s net sales increased 9% in the fourth quarter, to $137.4 billion, compared with $125.6 billion in the same period in 2020.

“Given the extraordinary growth we saw in 2020 when customers predominantly stayed home, the fact that we’ve continued to grow on top of that in 2021, our retail teammates have effectively operated in peak mode for almost two years,” Jassy said. 

“There’s a lot to look forward to in the months and years ahead.”

For the first time, Amazon separately disclosed how much revenue its advertising business had generated, rather than tucking it in with a broader category of sales data. Its advertising services generated $9.7 billion in the last quarter of 2021, a 32% jump from $7.3 billion in the fourth quarter of 2020.

Third-party sellers made up 56% of all unit sales, the highest “fourth-quarter mix” on record, according to Olsavsky.


Amazon’s online store, comparatively, dropped 1% to $66 billion in sales. And sales in physical stores grew 17% to $4.6 billion.

Revenue from Amazon Web Services grew 40%, from roughly $13 billion a year ago to $17 billion at the end of 2021, marking the highest year-over-year growth in its history, Olsavsky said.  

Amazon’s cloud computing operation also recently added new clients, including NASDAQ, Goldman Sachs, Best Buy and Meta, the parent company of Facebook, Instagram and WhatsApp. Self-driving company Aurora and Rivian also signed on for AWS services.

Revenue from subscription services, including Prime, grew 15% to $8.1 billion.

Amazon has raised prices for Prime members twice before — in 2014 and 2018. 

In the past, it hasn’t lost many subscribers after the bump in price, Olsavsky said, and he doesn’t expect retention will significantly drop this time either. He touted the addition of benefits for Prime members, like Thursday Night Football, the upcoming Lord of the Rings series and the expansion of one-day shipping to more than 90 markets. 

“It’s not a static program,” he said. “We’ll continue to add faster shipping, greater video and other features. … We’re pretty confident in the value proposition of our Prime offering.” 

Looking more broadly, Olsavsky broke down Amazon’s major investments to four categories for investors on Thursday’s call: 40% goes toward infrastructure, largely for its Amazon Web Services operation; 30% to fulfillment capacity and building warehouses; 25% toward transportation costs and building out its own transportation network; and 5% to things like offices and stores.

Amazon expects its expenses to increase in 2022.

“We’ve built a lot of capacity, we’ve hired a lot of people,” Olsavsky said. “Our teams are all — battling omicron right now [but] we do see the sun coming out and getting better here over the next number of quarters.”